Market Insight

IHS Markit reveals the top four Smart Cities predictions for 2018 and beyond

December 15, 2017


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The smart city market will accelerate in 2018 with smart city device shipments eventually surpassing 2 billion by 2030. Between September 2016 and September 2017 according to IHS Markit Smart Cities Database, the number of smart city projects grew by 64% year-on-year. As of the third quarter of 2017, trials and partial city rollouts accounted for 71% of total smart city projects, however the market is growing and 2018 will see an increase in extensive and full city rollouts.

Smart street lighting is an application ready to move in scale as proven by the recent example of San Diego deployment by Current by GE. Connectivity options are also quickly expanding in the market thanks to NB-IoT and LTE Cat-M1 deployments: Among other examples, during 2017 country-wide NB-IoT networks were deployed in the Netherlands and Ireland, while LTE Cat-M1 is now available nationwide in the US. IHS Markit expects 2018 to see continue expansion of these networks driving market penetration for these technologies.

Smart cities are a growing market. Within IHS Markit IoT segmentation of connect, collect, compute, and create IHS Markit highlighted the top four trends that will shape the smart city market in 2018 and beyond.

IHS Markit top four smart city predictions for 2018 and beyond:

  1. Connect – The funding issue is increasingly being addressed
  2. Collect – Smart city platforms gather momentum
  3. Compute – A new wave of technologies rises on top of the IoT
  4. Create – Smart cities are blurring the lines with smart home and smart region

The funding issue is increasingly being addressed

The issue of funding has been one of the main problems within the smart city market however, IHS Markit sees public and private initiatives tackling this problem and fostering market growth for 2018 and beyond.  Few initiatives were launched in 2017, and we expect more to come in the following years from both governments and industry players.

Countries understand the need for smart cities and actively work for their development: during 2017, many countries launched national challenges and funding in order to help the growth of the smart city sector

In March 2017, Australia launched the $50 million Smart Cities and Suburban Program to support the development of smart city projects that will enhance the liveability, productivity, and sustainability of cities in Australia. The program will run for three years from 2016-17 to 2018-19. The application for the first round of the program opened in March 2017 and closed in June 2017. In November 2017, the Assistant Minister for Cities and Digital Transformation announced the winners of the first round of the program, with a total of 52 projects benefitting from $28.5 million in Government funding. A second round of funding is expected to open in the first half of 2018.

In Vietnam the Smart Cities Innovation Challenge opened in July 2017, with the goal to select companies to present to the Steering Committee for Smart Cities, cities and other local authorities. Among other benefits selected companies could receive up to S$3 million from the TNB Aura fund.

In November 2017, Canada launched the Smart City Challenge, a challenge open to all communities with a top prize of $50 million, two prizes of $10 million, and one prize of $5 million. Applications can be submitted up to April 2018 with winners eventually announced in 2019.

It is not only state governments that provide funding and support for market growth. . In June 2017, Bloomberg Philanthropists launched the 2017 Mayors Challenge for US cities. In March 2018, 35 champion cities will receive with up to $100,000 to start their innovative city projects and alter in October 2018, the winner will be awarded $5 million and four runners up will receive $1 million each. In November 2017, Cisco announced the City Infrastructure Financing Acceleration Program, a $1 billion financing program for cities wishing to develop smart city solutions.

Smart city platforms gather momentum

The smart city platform is the brain enabling the creation of a smart city shattering siloes and unlocking its real data-driven potential. Smart city platforms are a key element for the long-term smart city vision and many companies from all backgrounds are focusing on them. Network vendors, start-ups, telecom operators, software vendors, and application providers, multiple competitors look at the opportunity in the platform space.

Among others, recent announcements include the launch of specific units targeting the IoT/smart cities and platform space such as Hitachi Vantara, Interdigital’s Chordant, and Cisco rebrand and smart cities–IoT alignment with the update of its “Cisco Kinetic for Cities” platform.

The smart city platform emerges in smart cities with two leading trend. These different approaches help building cities of different sizes and needs: there is the expansion of horizontal holistic platforms and the enhancements of vertical specific platform to target multiple vertical applications. The horizontal platform can be seen as representing a top-down approach where the deployment of such a platform from the top is functional to ease the development and expansion of multiple applications from the bottom. The vertical application platform expanding across verticals can instead be represented as a bottom-up approach, where the needs of upgrading a specific application form the base that could be used for the expansion and improvement of other applications.

A new wave of technologies rises on top of the IoT

While innovation in the IoT connectivity layer continues –NB-IoT and LTE Cat-M1, leading the way to 5G – IHS Markit sees new technologies expanding on top of the IoT framework. Machine learning and artificial intelligence, edge computing, drones, and blockchain, all started emerging in the past years, will grow in 2018, and will play a defining role in the future smart city.

The industry is focusing, research, investment, and expectations on AI. AI and machine learning are still filtering in smart cities nevertheless they will be a game changer and a key differentiator in the coming years. AI can be video analytics used in security cameras to identify objects or recognise individuals and vehicles. However, it can also take the shape of chatbots easing citizens’ engagement and services. Examples of this solution include Los Angeles’ launch of Chip (City Hall Internet Personality) in May 2017 a chatbot helping people by offering answers, resources, and guidance and Brussels’ Société Bruxelloise de Transport Public launch in August 2017 of a chatbot on Messanger to answer questions about things to do in the city. Further, launches are expected by the likes of Moscow and Atlanta.

A feature of the IoT and smart cities market is a growing attention on edge computing, with many industry competitors focusing on edge solutions as done by many including Microsoft, Huawei, Silver Spring Networks, and Dell. Other technology innovations that have started scratching the surface of smart cities are drones and blockchain. Drones can be used for gathering data, mapping, maintenance, and security (the use of drones equipped with sensors to gather data is tested in Andorra); blockchain can be used to improve multiple applications including, government services and payments. Dubai is testing the use of blockchain tracking the import and export of goods into Dubai; the city is also testing the use of blockchain for governmental processes and services. The town of Zug, in Switzerland, is also testing the use of blockchain supporting and securing citizens’ digital identity. Moscow is also experimenting with blockchain technology and in December 2017 it launched an e-voting pilot using blockchain technology.

Smart cities are blurring the lines with smart home and smart region

Smart cities are entering the smart home and engaging citizens leveraging smart home digital assistants such as Amazon’s Alexa. Alexa is not the only means to bridge the smart city-citizen gap as mobile apps and social or video platforms can all be used.

In February 2017, Lousville worked with IFTTT, a web and mobile platform to bring city data into the citizens’ life. As a result of this partnership a citizen can receive a notification on his smart watch when a new bill is introduced or he can receive a message on Facebook when the air quality changes in Louisville. Back in 2016, Los Angeles launched an Alexa skill providing information about city events. Later, the city of Las Vegas launched an Alexa skill in June 2017 to provide information such as city news and activities, parks’ information, and others.

These developments are not the end of the road, but rather the starting point. Future developments will take the shape of payment and requesting/receiving permits through the smart city-smart home axis.

The smart city needs to embrace new technologies and understand shifting consumers’ habits. Las Vegas worked on a project to bring city content such as council meetings, news, and activity to Apple TV and Roku creating a new Las Vegas channel. By doing so the city tries to further citizens’ engagement keeping in mind the changing consumers’ habits of cord cutters in the video space.

The smart city is not only expanding towards the smart home but also towards the smart region in a trend that will shape 2018 and will continue accelerating in the coming years. Examples of this trend can be found across all verticals for instance with the UK’s Department of Transport targeting smart ticketing across its countrywide rail network.

 

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